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interaction often leads to questionable results with regard to the market demand function for status goods. Following Spence, who … provides a game theoretical derivation of the market demand function for status goods with respect to level and distribution of … buy the good (a status good in a narrow sense). If (3) the price is located in a very high as well as in a middle range …
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Signaling models of esteem have implications for peer pressure. Using Bénabou's and Tirole's "honor-stigma" model, we analyze how the pressure to engage in costly signaling changes with the distribution of peers' attributes. In particular, we provide novel comparative statics on the effects of...
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